EAC: Estimate at Completion Formulas and Usage
PMBOK v8 Definition
Estimate at Completion (EAC) is "the expected total cost of completing all work, expressed as the sum of the actual cost to date and the estimate to complete." It is a forecasting tool used during project monitoring and controlling to predict the final project cost based on actual performance to date.
Why It Matters for the Exam
The EAC appears frequently in PMI exam questions because it tests your ability to select the correct formula based on the project situation described. Questions typically present a scenario with given EV, PV, AC, BAC, CPI, and/or SPI values, and ask you to calculate the appropriate EAC. The exam tests whether you understand which formula to apply, not just how to calculate.
Key Points to Remember (for the exam)
- EAC = BAC / CPI: Use when the current CPI is expected to continue for the remainder of the project (typical cost performance will persist)
- EAC = AC + (BAC – EV): Use when future work will be accomplished at the planned rate (original budget rate, no cost variance expected going forward)
- EAC = AC + Bottom-up ETC: Use when the initial plan is no longer valid (fundamental changes require re-estimating remaining work)
- EAC = AC + [(BAC – EV) / (CPI × SPI)]: Use when both cost AND schedule performance influence remaining work (CPI and SPI both matter)
- BAC (Budget at Completion) = total planned budget for all work
- EAC > BAC = project is likely to exceed original budget
- EAC < BAC = project is likely to finish under original budget
Typical PMI Exam Example
Your project has a BAC of $100,000. After 6 months, EV = $40,000, AC = $50,000, and CPI = 0.80. You believe the cost performance will continue at the same rate for the remaining work. What is the EAC?
Answer: EAC = BAC / CPI = $100,000 / 0.80 = $125,000
PMI Exam Traps
- Trap: Using EAC = BAC / CPI when the scenario says "future work will be at planned rate"
- Reality: That scenario requires EAC = AC + (BAC – EV)
- Trap: Confusing EAC with ETC (Estimate to Complete)
- Reality: EAC = total expected cost including work done; ETC = cost to finish remaining work only
- Trap: Using the CPI x SPI formula when only CPI is expected to influence remaining work
- Reality: The CPI × SPI formula requires BOTH factors to influence the estimate
- Trap: Forgetting that EAC > BAC means a cost overrun is forecasted
- Reality: EAC > BAC = unfavorable cost variance expected
Important PMI Connections
| Related Concept | Relationship Type | Exam Attention Point |
|---|---|---|
| BAC | Input to EAC formulas | BAC is the denominator in EAC = BAC/CPI and base for BAC – EV |
| CPI | Driver of EAC calculation | Determines which EAC formula to use (CPI expected to continue vs. not) |
| SPI | Secondary driver (CPI × SPI formula) | Only used when schedule performance also affects remaining cost |
| ETC | Component of EAC | EAC = AC + ETC (bottom-up ETC when initial plan is invalid) |
| EV | Input to multiple EAC formulas | EV appears in BAC – EV for work remaining calculation |
Quick Review Questions
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A project has BAC = $200,000, EV = $80,000, AC = $100,000, CPI = 0.80, SPI = 0.90. If the cost performance is expected to continue but schedule performance will NOT affect remaining costs, which EAC formula should you use?
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Your project's initial plan is no longer valid due to a major scope change. You have AC = $60,000 and a new bottom-up estimate of remaining work = $90,000. What is the EAC?
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A project with BAC = $500,000 has EV = $300,000 and AC = $350,000. You believe remaining work will be done at the original planned rate. Calculate the EAC.
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When would you use EAC = AC + [(BAC – EV) / (CPI × SPI)] instead of EAC = AC + (BAC – EV)?
PMBOK v8 Reference
Section 4.5 - Monitor and Control Project Work (Process Group: Monitoring and Controlling, Knowledge Area: Project Integration Management) and Section 7.4 - Control Costs (Process Group: Monitoring and Controlling, Knowledge Area: Project Cost Management)